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TNC TECHNOLOGY
10 airportbusiness December 2017/January 2018
By Tom Kinton
Airport Revenues Must Adapt to
New Transportation Technologies
As TNCs and autonomous vehicles grow in North America, airports need
to adapt now to stave off losses in revenues on the horizon.
Airports have become increasingly reliant on
revenues from parking and rental car concessions,
often using the funds to support continued oper-
ations, new projects and to support bond ratings
crucial for the healthy financing of future projects.
Yet steadily increasing revenues from sources like
these may be under threat from several new trans-
portation technologies transforming how consum-
ers get to airport.
Airports in the United States face strict regu-
lations that dictate where and how they can find
revenue to support operating expenses or major
development projects. Passenger airline landing
fees and other aeronautical revenue is general-
ly benchmarked, per regulatory requirements,
against operating expenses.
However, revenue from land leases, terminal
retail and concessions, parking and rental cars
have all become part of a diversified and profit-
able income strategy for many airports in the U.S.
Today, airports across the nation rely on these rev -
enues to fund capital improvements and operating
expenses not covered by agreements with airlines.
Recent history shows these revenue streams
have been quite healthy. Non-aeronautical reve-
nue for U.S. airports grew more than 4 percent
between 2004 and 2013, according to the Airports
International Council, compared to a 1.3 percent
growth rate in passenger enplanement. Parking,
rental cars and terminal concessions are the
three main sources of non-aeronautical revenue
for U.S. airports, accounting for 45 percent of total
revenue in 2013.
More recent data from the FAA show the rising
trend continuing through 2015:
The direction of these trends has been good
news for airport budgets. The high margins that
come with these sources make them attractive
places to find funding and they have become a
principal source of financing for capital-intensive
infrastructure improvements. According to the
Airports Council International-North America,
U.S. airports may need almost $100 billion over
the next five years to fund capital projects already
on the books.
THE UNEXPECTED DISRUPTION
Clearly, anything that disrupts the flow of airport
funding from parking and rental car revenues
puts airports in a financially precarious position.
While the ups and downs of the economy may have
dictated how those revenues will materialize in
the past, today it is trends in new transportation
technologies that will be forcing the adoption of
new airport revenue models.
R ide-hailing services, a lso know n as
Transportation Network Companies (TNCs), like
Uber and Lyft are already making impacts. Uber,
one of the most successful TNCs, was founded in
2009 and is now valued at more than $70 billion,
operating in 70 countries. An estimated $3.36
billion was spent on Uber rides in the first half of
2015, compared to $2.93 billion in all of 2014 — a
tremendous rate of growth.
According to Certify, a company that pro-
vides business expense reporting software,
ground transportation expenses attributed to
E
arly in spring, reports began to emerge
from some airports that fewer travelers
were choosing to park vehicles at airport
lots and garages. At Dallas Fort Worth
airport, parking revenues were forecast
to be $10 million short this year, in part
due to more people using services like Uber and Lyft
to get to the airport. If these reports are the begin-
ning of a larger trend, it will pose serious trouble
to most modern airport financing models.